SQL server performance with move than 1 Gb RAM

We have around 20 customers running SQL server 2000 Enterprise Edition and each of these servers have 2GB or more RAM. When I configure SQL server to dynamically use upto 1.5 GB, I see that SQL server gives a very poor response time when it gets close to 1.5 GB. Sometimes, the clients complain that they get error messages becuase the server is not responding. I have to fix the memory to 850 Mb to make SQL server work smoothly. Has anyone seen this issue before? We have a lot of RAM at our customer sites that are not being used at present. I wish we were able to use this more effectively for data cache.

You sure it's Enterprise Edition and not Standard Edition? What flags do you have on in the boot.ini file of the server? I would assume you do not have awe enabled turned on? What service pack level are you on for SQL Server? What is the OS? What is the service pack for the OS?

You need to leave minimum 1GB free for the OS, regardless of your configuration. Otherwise, you will have problems.